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Boeing to build new tanker

Thu., Feb. 24, 2011, 2:31 p.m.

This artist's rendering provided by Boeing Co. shows Boeing's NewGen Tanker that the Chicago-based company has proposed to the U.S. Air Force. Boeing competed with European Aeronautic Defense and Space Company (EADS) to win a $35 billion Pentagon contract to build nearly 200 giant airborne refueling tankers, to replace the Air Force's Eisenhower-era KC-135s. The Boeing aircraft is based on the company's 767 commercial airplane and will be built at existing company facilities, Boeing says. (Boeing Co.)

Contract worth $35 billion

The Boeing Co. will build the next generation of air refueling tankers for the U.S. Air Force, winning a hotly contested decade-long bid to replace about a third of the KC-135s that have served as the military’s flying gas stations for nearly half a century.

The Air Force announced it was choosing a military version of the Boeing 767 over the Airbus A330 in the competition for a contract worth more than $30 billion and 50,000 jobs. Both aerospace giants get their parts from all over the world, but Boeing will build the planes in Everett and in Wichita, Kan.

Gov. Chris Gregoire said Thursday the contract will add about 11,000 aerospace jobs to Washington, and will urge the Legislature to make sure the training is available at community colleges so that state residents can take advantage of that expansion. “If they don’t find the skilled work force in the state, they’ll bring them in from out of state.”

Airbus would have assembled its tanker in Alabama at a closed military base.

Both planes met the Air Force’s 372 mandatory requirements and “were awardable,” Air Force Secretary Michael Donley said in announcing the contract Thursday afternoon after the stock market’s close. But the Boeing proposal offered “substantial savings” which he didn’t quantify. But the Airbus tanker, a larger plane, was expected to have higher costs to the military for extended runways and enlarged hangars.

The new plane, which Boeing has been calling the KC-X, will be designated the KC-46A. The Air Force will receive the first 18 planes in 2017, but won’t decide for several years which bases will get them.

The KC-135 is the plane flown by units at Fairchild Air Force Base on the West Plains. At one point, Fairchild was scheduled to be the first base to get replacement tankers, but that was when the Air Force had a different plan for replacing the Eisenhower-era planes.

Air Force officials at Fairchild, home of the 92nd Air Refueling Wing, declined to comment on the bid outcome Thursday, referring any questions to the Defense Department. Fairchild’s tankers also are flown by the 141st Air National Guard.

The first 18 KC-46As will be delivered to Air Force bases in 2017, but the decision on which bases won’t be made for several years.

Congressional delegations in Washington and Kansas hailed the Pentagon’s decision. Sen. Patty Murray who has been a supporter of the Boeing tanker replacement since it was first proposed in 2001, called the contract a “major victory” for America’s workers, its aerospace industry and military.

“It is consistent with the president’s own call to ‘out-innovate’ and ‘out-build’ the rest of the world,” Murray said in a prepared statement released just minutes after the announcement was made.

Members of the Washington delegation were bracing for bad news, as industry insiders had speculated in recent days that Airbus would win the contract. Sen. Maria Cantwell, D-Wash., said they were concerned that European Aeronautic Defence and Space Co. had been given every advantage to submit a bid and that unfair trade subsidy rulings by the World Trade Organization weren’t being considered by the Pentagon. Boeing still won, apparently decisively, she said.

But in Alabama, where the Airbus tankers would have been assembled, reaction ranged from disappointed to bitter.

“The U.S. Department of Defense, in not awarding the aerial refueling tanker contract to EADS North America today, has made a egregious error and America’s military men and women are ultimately the biggest losers,” the Mobile Area Chamber of Commerce said in a prepared statement.

The Air Force has tried to upgrade the tanker fleet for nearly a decade, with a series of missteps. Shortly after Sept. 11, 2001, it began discussion of a plan to “lease” some 100 tanker versions of Boeing’s 767 to allow it to retire some of the oldest KC-135s in the fleet. That idea had strong support from members of Congress in Washington and Kansas, where the company has assembly lines, but drew criticism from some budget hawks who noted that leasing was as expensive as buying in the long run, and the Air Force had to give the planes back when the lease was up.

Then Boeing got into trouble for offering a job to the Air Force official in charge of procurement, who was negotiating the tanker contract. The official, Darleen Druyun, and Boeing CFO Michael Sears were both fired, convicted of federal crimes and jailed.

When Congress eventually gave up on leasing and told the Air Force to buy tankers, Airbus joined the competition with Boeing. The Europe-based manufacturer was awarded a contract in 2008, but the Air Force later had to rescind the deal after government studies showed it was awarded on different specifications than the military said it wanted when the competition started.

Recently, the Pentagon had another SNAFU, admitting that it sent the two manufacturers the competition’s proprietary information by mistake.

EADS could challenge the contract, just as Boeing did when it lost the competition in 2008. Air Force officials tried to downplay the possibility that such a challenge would be successful, saying competition was open and transparent and “favored no one except the taxpayer,” according to Deputy Defense Secretary William Lynn.

After praising both companies for waging a “splendid competition,” Donley suggested that both remember they have “a long-standing releationship with the Air Force that we expect would continue.”